Reuters is reporting that a suicide bomber was believed to be responsible for the explosion, quoting two unnamed US officials as the source. British Police have not confirmed this.

A "broken" Ariana Grande tweeted several hours after the fatal explosion:

A woman is consoled outside Manchester Arena following the explosion. Credit:PA

Prime Minister Theresa May has released a statement on the incident.

"We are working to establish the full details of what is being treated by the police as an appalling terrorist attack," she said.

Concertgoers attempting to get out of Manchester Arena following an explosion. Credit:Twitter

It was a huge explosion - you could feel it in your chest. It was chaotic.

Catherine Macfarlane, witness

"All our thoughts are with the victims of the families of those who have been affected."

If confirmed as a terrorist attack, it would be the worst strike on British soil since 2005, when bombers killed 54 people on London trains and buses.

Police at Manchester Arena after reports of an explosion.Credit:PA

Video showed chaotic scenes of people screaming and running in the aftermath of the blast. The arena was packed with attendees and pink balloons that had fallen from the ceiling during the concert's final song. Initially, concertgoers said they thought popping balloons had set off a panic.

But witnesses later reported seeing the prone bodies of those who had been wounded and killed, as well as others who were streaked with blood and were staggering away from the scene. Some were injured in the rush to get out.

Armed police gather at Manchester Arena after reports of an explosion at the venue during an Ariana Grande gig in Manchester.Credit:AP

The hospital, Wythenshawe, said it was dealing with "mass casualties."

The Manchester Arena, opened in 1995, can hold up to 21,000 spectators; it was not clear how many people were in the crowd for the concert. Much of the crowd comprised young people and children, unaccompanied or with their parents.

Pop singer Ariana Grande had just finished performing at the arena when an explosion was heardCredit:Getty Images

A representative for Grande told Variety that the singer is "okay" and that they were "further investigating what happened".

Sources have told industry website TMZ that Grande was "in hysterics" after learning people were killed at her concert.

Her next concert, due to be performed in London on Thursday at O2 arena, has been left in doubt due to security concerns and the fact Grande is apparently in no state to perform.

A spokesperson for the Department of Foreign Affairs and Trade said it was not known if any Australians were involved.

"There have been reports of an explosion at an Ariana Grande concert in Manchester UK on the evening of 22 May (local time). The Australian High Commission in London is making urgent enquiries to determine whether any Australians have been affected by the incident."

The US Department of Homeland Security said it may bolster security in and around public places following the incident in Manchester.

The department said in a statement it had "no information to indicate a specific credible threat involving music venues in the United States."

"However, the public may experience increased security in and around public places and events as officials take additional precautions," the statement said.

Concertgoers flee after explosion

Andy Holey, whose wife and daughter were at the concert, told BBC News that the explosion was near to a ticket office. He was blown off his feet when it happened and was left unconscious.

He said he saw several bodies around him when he came to.

A witness who said the explosion was so big "you could feel it in your chest".

"We were making our way out and when we were right by the door there was a massive explosion and everybody was screaming," Catherine Macfarlane told Reuters.

"It was a huge explosion - you could feel it in your chest. It was chaotic. Everybody was running and screaming and just trying to get out of the area."

Karen Ford told the BBC the explosion went off after the lights went on at the end of the concert.

"All of a sudden [a] huge sound ... an explosion went off," she said.

"Everyone just stopped and turned round then somebody shouted 'it's a bomb' and everyone started running.

"People were pushing each other aside in panic, she said, and there were "a lot of children without parents with no-one to calm them down."

"There was screaming and crying and pushing. We were being crushed as we exited," she said.

Sasina Akhtar told the Manchester Evening News that she saw "young girls with blood on them".

"She [Grande] did her last song, we were in the lower tier and there was an explosion behind us at the back of the arena," she said.

"We saw young girls with blood on them, everyone was screaming and people were running. There was lots of smoke."

Steve Rotheram, Mayor of the Liverpool City Region, tweeted that his two daughters were "caught up in the Manchester explosion" but were safe.

One eyewitness told BBC he saw a man covered in blood.

"There was also a woman outside who looked like she had been hurt, she was on the floor," Josh Elliott said.

He added: "I think what the injuries have come from is people trying to get out as quickly as possible."

He said that "massive" balloons had come down into the arena during one of Grande's songs.

"My initial reaction was for me and my friends to get on the floor," he said. "I thought it was probably just a balloon, but at the same time in situations like this you just don't know what it is and it's better to be safe than sorry."

One fan at the concert told London's Telegraph how the explosion hit the venue as fans were leaving the building.

Majid Khan, 22, said: "I and my sister, along with a lot of others were seeing Ariana Grande perform at Manchester Arena, and we were all exiting the venue when around 10.40-10.45pm-ish a huge bomb-like bang went off that hugely panicked everyone and we were all trying to flee the arena.

"It was one bang and essentially everyone from the other side of the arena where the bang was heard from suddenly came running towards us as they were trying to exit Trinity Way and that was blocked so everyone was just running to any exit they could find as quickly as they could.

"Everyone was in a huge state of panic, calling each other as some had gone to the toilet whilst this had gone off, so it was just extremely disturbing for everyone there."

Grande, a 23-year-old singer with a big voice who started her career as a star on a Nickelodeon TV series, is on an international tour supporting her 2016 album, Dangerous Woman.

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The tour was scheduled to continue on Thursday at the O2 Arena in London. Two additional acts, Victoria Monet and Bia, performed as openers.